Hedge fund American Pegasus and three former top executives have settled charges that they used client assets to create a “pervasive” web of conflicts of interest, with themselves at the center.

According to the Securities and Exchange Commission, former CEO Benjamin Chui spent some $18 million of client cash to buy himself the subprime auto loan hedge fund’s sole loan supplier. Triffany Mok and Charles Hall, also former American Pegasus employees, were also allegedly party to that deal, which was not disclosed to investors.

The SEC said that by the end of 2008, some 40% of American Pegasus’ $100 million in assets was invested in loans Chui made to his other hedge funds and related businesses to keep them afloat. Chui, Mok and Hall then sold that debt to the hedge fund’s investors—for three times its value—to clear it, the SEC said.

The three former executives did not admit or deny wrongdoing. All three “voluntarily resigned” earlier this year, according to American Pegasus. The firm added that it has put into place new compliance protocols designed to avoid future conflicts of interest.

All told, American Pegasus and the three former employees agreed to $1.2 million to settle the charges. In addition, Chui has accepted a five-year ban, Hall a three-year ban and Mok an one-year ban.